The currency using informal sector bleeds on pay day

People’s resolve for bearing the pain of cashless days after demonetization will be tested during the first week of December. As the first monthly closing day passes on November 30, reports indicate that the informal sector and part-time labourers are about to bear the burnt.

Shortage of cash takes away their purchasing power and the employers are making innovative ways like half salaries, half month closures etc. Unorganised sector laborares are least digitally prepared and educated and this may stop them from cushioning from the current stale mate. Reports from several cities indicate that employers offer only a part of their salary. Large number of shops and retail establishment experienced poor turnover and this is the biggest setback for the sector in addition to currency scarcity.

Reports are diverse about the ground realities. Situation is expected to be tough for states with high migrant population like West Bengal.

Non-payment of salaries is expected to trigger another wave of income loss and consumption collapse in the coming days. This may further deteriorate situation in the unorganised sector.

For the organized sector, the cash ban created only limited problems. The normal withdrawal and ATM usage restrictions are the main operational difficulty for them. As far as state governments are concerned, many of them are providing salaries through Treasuries. Usually, treasuries don’t have banking licenses and hence are not able to provide cash to the employees.

Reports from big cities indicate that the formal private sector who are very much digitalized in transactions are less affected by demonetization.